Input Tax Credit available on Cash Carry Vehicles: Bombay HC quashes AAAR Order [Read Order]

A division bench of the Bombay High Court comprising Justice MS Sanklecha and Justice MS Sonak has set aside an order of the Maharashtra Appellate Authority for Advance Ruling (AAAR) wherein the authority had held that no input tax credit is available on the purchase of ‘cash carrying’ motor vehicles.

The bench was hearing a writ petition filed by CMS Info Systems Pvt Ltd, one of the largest ATM cash management companies in India.

According to the AAAR, the motor vehicles sold after usage as scrap would be chargeable to Goods and Services Tax. It was observed that the input tax credit would not be available on purchase of cash carry vans. This was based on the ground that money is excluded from the definition of goods as provided under the GST Act, 2017. Thus, not entitled to input tax credit in view of Section 17(5) of the GST Act.

Challenging the order of the appellate authority, the petitioner had contended that the concerned authority did not consider their principal submissions and hence there is a flaw in the decision making process. Further, ‘Goods’ as defined in Section 2(52) of the GST Act excludes ‘money’ from its ambit, the meaning to be given to ‘money’ for the purpose of Section 2(52) of the Act would be as defined in Section 2(75) of the GST Act. Thus, ‘Goods’ would include the money as cash being transported by the petitioners in motor vehicles, he said. Further, Section 17(5) of the GST Act excludes the benefit of input tax credit in respect of motor vehicles, unless used for transport of goods, Sriram submitted.

Setting aside the order, the bench held that “We find that the fundamental submission of the petitioner before the AARA was the fact that money would stand covered by the definition of ‘goods’ under Section 2(52) of the GST Act so long as the same is not used as legal tender. This on the basis of the definition of money provided in Section 2(75) of the GST Act. The aforesaid principal submission though recorded, has not been dealt with at all in the impugned order.

“In the light of the above, we note that the decision-making process has not been complied with by the Authority. It is necessary for the Authority to consider the submissions made by the parties before it and give its findings in the context of the submissions made. Ignoring a submission would render the order vulnerable to judicial review by this Court,” the bench said.